How to predict the K-line false breakthrough in advance through technical analysis?

Technical analysis is just an analytical method, just like any other analytical method.It is impossible to predict in advance how the market will proceed in the futureIf you can know in advance that this is a false breakout, or you say you have an 80% chance of knowing in advance that a certain node is a false breakout, then you should hold a reverse pending order (sell limit or buy limit) at a certain high or low point, and hang a stop-loss order to prevent the occurrence of this 20% small probability event.

In fact, you can't estimate the probability of a false breakthrough in the future. To put it bluntly, there is only a 50% probability of true or false. Whether you use fundamental analysis or technical analysis, it is a 50% probability, or divination, the same is true.

Technical analysis is not just an opening or stop loss or position squaring problem. If the technical analysis method cannot form a system, then any analysis cannot have a foothold in the financial marekt.Living is accidental.

For example, a trader who trades by the breakout method, suppose some of his rules are defined as follows:

opening rulesLong at the highest price of 30 k-lines and short at the lowest price of 30 k-lines. - - means that once the price reaches this price, it will be automatically filled. No matter what the volume is, what the MACD is, or what the moving average direction is.

stop loss rule: Long stop loss, 100 points below the opening price of the pending order stop loss; short stop loss, 100 points above the opening price of the pending order stop loss - any system has a stop loss, which not only means that we technical analysts know how to be humble, but also means that we understand that the market is unpredictable and the future is unpredictable. Compared with some funds who refuse to stop losses, we have reason to despise them.

initial funding: 1W USD

position managementOpen 0.001 lots for every $100, each opening amount fluctuates with the remaining funds. For $1w of funds, open 0.1 lots, and for 8888 funds, open 0.08 lots (accurate to 0.01). In this case, a 100-point stop loss is equivalent to a 1% loss of funds. Each time you lose 1%, you need to lose 1024 times in a row to lose all your money. I really don't know what people who liquidate positions think.

Position squaring rules: Put a 300-point position squaring order above the long, and a 300-point position squaring order below the short. - This means that when we make 3 times the profit of the risk, we will take the initiative to play. If the price does not reach 300 points after that, we will wait for the stop loss.

What's the point of this system model?

I use it to explain how traders respond to false breakouts.

Assuming that a trader is operating with the above system, then whether it is a false breakthrough or not is not something he should care about.Because he has a stop loss.No matter what the trading volume is at the opening point, how the MACD is or what other indicators are, he will open the position according to the system rules, and then hang up the stop loss order, as well as the position squaring list, and go to sleep.

Technical analysts always give themselves a margin of error, knowing that most of their cases are wrong and lose money, so they do not pursue the winning rate, but instead turn to the profit-loss ratio.

The above is for those who want to pursue a 100% win rate, or an 80% win rate, and who want to accurately identify true and false breakthroughs.

For breakout traders, false breakouts are indeed very troublesome, because the market has become more and more like false breakouts. In the face of false breakouts, breakout traders' capital curves may face a retracement. Therefore, in recent years, there have been many studies of false breakouts, and the following are recommended rules that are relatively simple and do not cause system complexity:

1. Expand the stop loss level - This method allows you to wait for the stop loss directly regardless of whether it is a fake break or a real break. In markets with many fake breaks, expanding the stop loss level is the most effective method.

2. Reduce the position volume - This method allows you to directly wait for the stop loss regardless of whether it is a fake break or a real break, because the position volume is reduced, the loss will be reduced, but the system's profit may also be relatively reduced.

3. When breaking through, if the breaking K line is a K line with a long upper shadow line and the closing price is below the pending order price, then you can directly position squaring, and then place the order at the original position again, because the long upper shadow line represents a strong resistance level.

So the conclusion is this:

You can not enter the market to test and then anticipate in advance whether the real breakthrough false breakthrough, the market may all indicators have contradictions or deviations, but a solid breakthrough and go far, the superposition of information in the financial marekt does not have a good effect.

If you are a breakout trader, then every breakout you need to enter the market, our current method can only allow you to reduce losses when false breakouts, and cannot anticipate the system to eliminate false breakouts to maximize system profits.